Singapore lifts 2004 growth to 3.5%-5.5% after strong Q403
By Irene Ang, Channelnewsasia.com

Singapore has revised up its forecast for 2004 economic growth, after a surprisingly strong 11 percent annualised expansion in the last quarter of 2003.

The Ministry of Trade and Industry (MTI) said on Thursday that it was now forecasting economic growth of 3.5-5.5 percent, up from 3.0-5.0 percent.

GDP growth in the last three months of 2003 slowed from the third quarter's 16.1 percent quarterly expansion, the fastest rise since 1997, when Singapore rebounded from a SARS-induced slump.

For the whole of 2003, the economy grew 1.1 percent, better than the MTI's January estimate of 0.8 percent.

The fourth quarter growth was also above the government's advance estimate of a 7.9 percent seasonally adjusted annual rate.

Year-on-year, fourth quarter growth was 4.9 percent, also better than the government's advance estimate of 3.7 percent.

The MTI said external demand rose 9.5% last year and was the key impetus to the improvement in GDP growth, with merchandise exports boosted by electronics and chemical products.

The manufacturing sector grew at a slower rate of 2.8% in 2003 compared with the 7.8% expansion in 2002, hurt by the contraction in the second quarter of last year on the back of the global economic uncertainties then.

In the fourth quarter, manufacturing grew 8.9% from a year ago.

The electronics sub-sector grew 5.5% in 2003, supported by semiconductor chips.

Growth in the chemicals and biomedical manufacturing clusters remained healthy at 6.2% and 8.1%, respectively.

But construction continued a downward spiral last year, shrinking by 11 percent, the ministry said.

Construction activities fell in both the public and private sectors, with overall certified payments slumping by 12%, the fifth straight year of decline.

Total contracts awarded also hit a 12-year low, plunging by 31%.

Public construction demand fell across most segments, but private institutional and industrial demand saw a sharp turnaround thanks to a few major projects, the MTI said.

The wholesale and retail trade sector expanded by 6.7% in 2003, more than double the 2.7% increase in the previous year, despite the severe acute respiratory syndrome (SARS) crisis.

This was because of the strong performance in non-oil re-exports in the second half of the year.

The financial services sector turned around from the sharp 6.3% contraction in 2002 to grow by 3.7% last year.

"This reflected the strengthening of activities in most major segments along with the recovery in the domestic and regional economies in the second half of the year," the MTI said.

Financial services grew 7.5% year-on-year in the fourth quarter.

Commercial banks' lending to non-bank customers rebounded strongly while fee-based activity in the offshore banking segment strengthened significantly.

Similarly, stock market and foreign exchange activities grew robustly.

The business services sector shrank by 1.8% last year, reversing from the 1.2% growth in 2002.

For the fourth quarter 2003, the sector shrank 1.1%.

Looking ahead, the MTI was optimistic, saying "the improvement in the external environment will sustain economic growth in Singapore".

Forward-looking indicators also point to a sustained improvement in the outlook for the Singapore economy.

The composite leading index, which tracks economic activity about three quarters ahead, continued to rise, albeit at a moderated rate of 3.1% in the final quarter of 2003, compared with the 6.3% gain in the third quarter, the MTI said.

But the ministry also warned of some downside risks.

It said: "The impact of the bird flu outbreak in the region has thus far been confined to the poultry industry. Nevertheless, should the situation worsen, it could dampen the region's tourism-related industries, including Singapore's."

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